IBM Study: Widespread Discontent in Retail Experiences, Consumers Signal Interest in AI-Driven Shopping Amid Economic Strain

Rhea-AI Summary

IBM (NYSE: IBM) reveals a new global study showing a widening gap between shopper demands and the current retail offering, with only 9% of consumers satisfied with in-store shopping and 14% satisfied with online shopping. The study surveyed nearly 20,000 global consumers, indicating an opportunity for retailers to integrate AI and other technologies into both digital and physical shopping experiences to meet changing consumer demands and economic challenges.

Insights

Market Research Analyst

The retail industry is undergoing a significant transformation, driven by changes in consumer behavior and technological advancements. The study conducted by IBM's Institute for Business Value highlights two critical aspects that are reshaping the retail landscape: consumer dissatisfaction with current shopping experiences and the potential of artificial intelligence (AI) to revitalize retail.

From a market research perspective, the low satisfaction rates for both in-store (9%) and online (14%) shopping experiences indicate a substantial opportunity for retailers to differentiate themselves. The expressed interest in AI by consumers who have not yet used it for shopping suggests a market that is ripe for innovation. Retailers that successfully integrate AI to enhance the shopping journey could gain a competitive edge, potentially increasing market share and customer loyalty.

The study also points to inflation influencing shopping behavior, with price becoming a primary factor in brand and store selection. This price sensitivity likely reflects a broader trend of consumers seeking value for money, which retailers must address through competitive pricing strategies and cost-effective operations.

Financial Analyst

The findings from IBM's study have significant implications for the financial health of the retail sector. The dissatisfaction with shopping experiences could lead to a decrease in consumer spending within stores that fail to innovate, impacting their revenue and profitability. Conversely, retailers that invest in AI and other technologies to improve the customer experience could see an increase in sales and customer retention, which is crucial in the current economic climate.

Inflation's impact on consumer behavior underscores the importance of pricing strategies in retail financial planning. Retailers may need to re-evaluate their cost structures and supply chain efficiencies to maintain profitability while offering competitive prices. Investments in AI could also lead to operational efficiencies, reducing costs and improving margins.

For investors, these trends suggest that retail companies prioritizing customer experience through technology may present more attractive investment opportunities. However, the capital expenditure required for such technological advancements must be balanced against expected returns.

Technology Adoption Strategist

The study's findings emphasize the critical role of AI in the future of retail. Retailers must carefully strategize the adoption of AI to address the gaps in consumer satisfaction. This involves not just implementing technology, but doing so in a way that aligns with customer desires for personalization, efficiency and enhanced service.

AI technologies like virtual assistants and personalized recommendations can increase convenience and relevance for shoppers, leading to a more engaging shopping experience. However, the integration of AI must be handled with a clear understanding of the customer journey and pain points, ensuring that technology solutions are customer-centric and add tangible value.

Moreover, the technology adoption strategy must consider data privacy concerns and the ethical use of AI, as consumer trust is paramount. Retailers that successfully navigate these considerations can create a sustainable competitive advantage and drive growth in a challenging economic environment.

• Only 9% of respondents say they are satisfied with the in-store shopping experience; only 14% say the same for online shopping.
• Roughly 80% of consumers surveyed who haven't used AI for shopping expressed an interest in using the technology for various aspects of their shopping journey.

ARMONK, N.Y., Jan. 8, 2024 /PRNewswire/ -- As the retail landscape faces mounting pressure from evolving consumer expectations and economic headwinds, a new global study from the IBM (NYSE: IBM) Institute for Business Value, reveals a widening gap between shopper demands and the current retail offering.

The third biennial consumer study*, "Revolutionize retail with AI everywhere: Customers won't wait," surveyed nearly 20,000 global consumers and reveals a dissatisfaction with retail experiences, with only 9% of consumers surveyed saying they are content with in-store and 14% content with online shopping.  Yet technology could play an important role in enhancing the overall shopping experience, with over half of the respondents indicating they are eager for AI enhancements like virtual assistants (55%) and AI applications (59%) as they shop. Influenced by inflation, six in ten consumers surveyed also say inflation has impacted how they shop, with 62% saying that price is a top reason they switch stores or brands.

"In the face of rapidly shifting consumer expectations and the stark realities of today's economic picture for households, the retail sector is presented with an ongoing challenge—and an unprecedented opportunity," said Luq Niazi, Global Managing Director at IBM. "We are seeing that today's consumers, faced with more choices and channels than ever, are increasingly making their purchasing decisions based on the cost and the quality of experiences that retailers provide. The IBM IBV Consumer 2024 Study underscores an opportunity for retailers to integrate AI and other technologies into both digital and physical shopping experiences to meet these changing consumer demands and their economic challenges. Leveraging advances in AI technologies, retailers can forge ahead into a new era of commerce and fulfilment, leading with innovation to create shopping experiences that are intuitive, unified, personalized and efficient."

Noteworthy findings from the study include:

• In-Store Experience Lacks Luster: Despite a preference for physical stores by 73% of those surveyed, only 9% are satisfied with the in-store experience. Consumers surveyed want greater variety of products available (37%), more information about products (26%), and faster checkout (26%) in stores. Most consumers surveyed (65%) are supplementing their in-store experience by using mobile apps while shopping -- demonstrating a trend toward a digitally integrated in-store experience. 
• Online Shopping Shortcomings: Online retail isn't immune to criticism; two-thirds of consumers surveyed discover new products via the web, yet many have expressed dissatisfaction with their online shopping journey, citing challenges finding the products they want (36%), not enough information about products (33%), and a cumbersome return process (33%).
• Consumers Desire Digital Integration: Consumers surveyed showed a strong interest in using AI technology to enhance various aspects of their shopping. Most consumers (59%) said they would like to use AI applications as they shop and 4 in 5 consumers who haven't used the technology for shopping reported an interest in trying it. Personalization and targeted offerings are in demand, with 52% of consumers surveyed interested in receiving information, advertisements, and offerings from stores that are relevant to their specific interests. Yet there remains a stark satisfaction gap for current AI assistant users surveyed. Only about one-third of responding consumers who have used virtual assistants are satisfied with the experience and nearly 20% were so disappointed that they don't want to use virtual assistants again, signaling a mismatch between current tech offerings and shopper expectations.
• Economic Forces at Play: Economic challenges, particularly inflation, are influencing shopping behaviors. Consumers surveyed are seeking flexible payment options, with 55% desiring more varied payment options and 46% reporting they would like to pay for their purchase in installments. As inflation and economic uncertainty pinch pocketbooks, 62% of consumers surveyed also say price is a top reason they would switch stores or brands.

Revolutionize retail with AI everywhere: Customers won't wait underscores the urgent need for retailers to innovate and integrate advanced technologies, such as AI, to elevate the shopping experience. The study also serves as a resource for retailers, outlining actionable strategies to help these businesses meet changing consumer demands.

Connect with IBM at NRF 2024: Generative AI is taking center stage for IBM at NRF'24. Join us as we delve into how the technology is enhancing everything from customer engagement and personalization to operational efficiency. We'll share innovative examples in marketing, supply chain management, and sustainability. IBM industry experts will be at Booth #5006. Stay updated via our NRF webpage. #NRF2024

*Study Methodology:
The IBM Institute for Business Value surveyed 20,000 consumers across 26 countries on their digital habits, their use of AI and generative AI, and their expectations for brands. Responses were analyzed by age group, income and purchasing habits across product categories.

The IBM Institute for Business Value, IBM's thought leadership think tank, combines global research and performance data with expertise from industry thinkers and leading academics to deliver insights that make business leaders smarter. For more world-class thought leadership, visit: www.ibm.com/ibv

About IBM
IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Thousands of government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM's hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM's breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM's long-standing commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information.

Contact:
Kelsey Lazio
IBM
Kelsey.Lazio@ibm.com

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SOURCE IBM

FAQ

What did the study reveal about consumer satisfaction with in-store shopping?

The study revealed that only 9% of consumers are satisfied with in-store shopping experiences.

What technology are consumers eager for to enhance their shopping experience?

Consumers are eager for AI enhancements like virtual assistants (55%) and AI applications (59%) as they shop.

How many consumers were surveyed in the study?

The study surveyed nearly 20,000 global consumers.

What is the opportunity highlighted for retailers in the study?

The study indicates an opportunity for retailers to integrate AI and other technologies into both digital and physical shopping experiences to meet changing consumer demands and economic challenges.

Who is the Global Managing Director at IBM quoted in the study?

Luq Niazi, Global Managing Director at IBM, was quoted in the study.